Executive Summary

In observance of Equal Pay Day (March 31, 2020), PayScale has updated our tremendously popular Gender Pay Gap Report for 2020. Since we have started tracking the gender pay gap, the difference between the earnings of women and men has shrunk, but only by an incremental amount each year. There remains a disparity in how men and women are paid, even when all compensable factors are controlled, meaning that women are still being paid less than men due to no attributable reason other than gender. As our data will show, the gender pay gap is wider for women of color, women in executive level roles, women in certain occupations and industries, and in some US states.

Recently, pay equity has been thrust under a glaring media spotlight. The #MeToo movement of 2018, which began as an outing of sexual harassment and sexual assault, cascaded into analysis of gender inequality in the workplace in 2019, encompassing not only pay inequity but also barriers to advancement and representation of women in leadership. In addition, several high-profile class action lawsuits have made pay equity a hot topic in executive boardrooms across the country.

Our research shows that the uncontrolled gender pay gap, which takes the ratio of the median earnings of women to men without controlling for various compensable factors, has only decreased by $0.07 since 2015. In 2020, women make only $0.81 for every dollar a man makes.

The controlled gender pay gap, which controls for job title, years of experience, industry, location and other compensable factors, has also decreased, but only by $0.01 since 2015. Women in the controlled group make $0.98 for every $1 a man makes.

New to the gender pay gap report for 2020 is analysis on the impact of lost wages on lifetime earnings. By calculating presumptive raises given over a 40-year career, we find that women in the uncontrolled group stand to lose $900,000 on average over a lifetime. Lost earnings narrow to $80,000 for the controlled group, but this is still significant, especially if you consider how lost earnings due to the gender pay gap would grow with compound interest if invested each year for 40 years.

To illustrate the importance of the gender pay gap in more detailed terms, we also looked at the top 20 jobs with the highest gender pay gap. Here, the gender pay gap ranged from $0.83 (Anesthesiologists) to $0.90 (Sales Representatives) for the controlled group, showing that the gender pay gap is very real and larger for women in certain occupations.

CONSIDERATIONS FOR COVID-19

The coronavirus pandemic of 2020 has forced a large portion of the population to work remotely, with layoffs on the horizon for some occupations and industries. Women have a higher risk of suffering greater penalties in earnings as result. Women make up a larger percentage of occupations in Community & Social Services, Education, Library & Training, Office & Administrative Support, and Personal Care & Services, which are more likely to be suspended, laid off, or forced to work reduced hours. Women are also more likely to have to take time off work, or even resign their positions, in order to care for children who are no longer in school as well as other family members.

Previous research from PayScale also found that women often incur a pay penalty upon returning to work after an absence—7 percent less on average for the same position. We also examined the gender wage gap for workers in positions that are highly impacted by the coronavirus. For example, we found that elementary school teachers make $0.92 for every $1 a male makes. Flight attendants also make $0.92. Among healthcare practitioners, women family doctors (GPs) make $0.94 to the dollar while nurses make $0.98. This is when all compensable factors are controlled. Women also notably also comprise 90 percent of the nursing profession, facing significant health risks while being paid less compared to their male counterparts.

The State of the Gender Pay Gap in 2020

IN 2020, WOMEN EARN 81 CENTS FOR EVERY DOLLAR EARNED BY MEN.

This figure is representative of the uncontrolled — or “raw” — gender pay gap, which looks at the median salary for all men and women regardless of job type or worker seniority.

In other words, the median salary for men is roughly 19 percent higher than the median salary for women. This figure represents a 2 percent improvement from 2019 and a 7 percent improvement from 2015, when the median salary for men was roughly 26 percent higher than the median salary for women.

What is the gender pay gap once all compensable factors such as experience, industry and job level are accounted for? It’s not zero.

In fact, when men and women with the same employment characteristics do similar jobs, women earn $0.98 for every dollar earned by an equivalent man. In other words, a woman who is doing the same job as a man, with the exact same qualifications as a man is still paid two percent less for no attributable reason. This controlled gender pay gap is the same as last year. The closing of the controlled gender pay gap has slowed in recent years, shrinking by only a fraction of one percent year over year. It has shrunk a total of $0.01 since 2015.

HOW MUCH DO WOMEN MAKE COMPARED TO MEN?

Uncontrolled Gender Pay Gap

This measures median salary for all men and all women

Women earn

81¢

for every $1earned by men

Controlled Gender Pay Gap

This measures median salary for men and women with the same job and qualifications

Women earn

98¢

for every $1earned by men

The Gender Pay Gap Over Time

Using PayScale’s crowdsourced compensation data

WHY ARE WOMEN PAID LESS THAN MEN?WHY IS THE UNCONTROLLED PAY GAP SO MUCH LARGER?

Part of the reason for the gender pay gap is that women are more likely to take a break during their careers to have children or to seek lower paid positions that offer more flexibility to make it easier to manage a family. Some people mistakenly assume that this “explains” the gender wage gap and eases fears over sexism. However, this explanation does not fully account for the gap. Neither do differences in education, experience, and occupation, as we can see from the controlled gender pay gap. It also doesn’t negate sexism in the workplace.

Factors that are likely to impact the gender pay gap but are difficult to measure include unconscious bias and discrimination against women, including assumptions that women will leave the workforce to have children or that women with children should earn less than men. In a 2017 survey, the Pew Research Center found that 42 percent of women said they have experienced gender discrimination at work compared to 20 percent of men who said the same. One of the most commonly reported forms of discrimination is earning inequality. Indeed, 25 percent of women said that they have earned less than a man doing the same job while just 5 percent of men said they have earned less than a woman doing the same job. Women with children also make less than men with children or women without children. This is often called the motherhood penalty or the childbearing penalty.

The research also shows that women occupy more lower paying positions than men. Although women have increased representation in higher paying jobs today than they did when the Equal Pay Act was signed over 50 years ago, women as a whole are still underrepresented in high paying jobs and leadership roles, especially in the C-Suite.

LOST EARNINGS OVER A 40-YEAR CAREER

When looking at the gender pay gap statistics as fractions of a dollar, it can be difficult to understand the impact on earnings over a lifetime. This is difficult in part because compensation over time for an individual is not static. Annual pay for individuals tends to increase over time. However, a rough calculation can be revelatory.

For example, let’s assume the average woman starts working at age 22 and retires at age 62, a career of 40 years. Let’s also look at the median pay earned by women in 2020 for the uncontrolled group ($49,800) and the median pay earned by women in 2020 for the controlled group ($60,700) compared to men ($61,700). These differences in women’s earnings are based off a gap of $0.81 and $0.98 on the dollar respectively. In 2020, the average lost compensation for women in the uncontrolled group compared to men is $11,900. For the controlled group, the average lost compensation in a year compared to men is $1,000.

So how much do women lose over a 40-year career? Let’s assume that over this 40-year span, the gender pay gap does not change and that employers offer an average 3 percent base pay increase to their employees each year (as past research from our Compensation Best Practices Report has shown to be the trend). If we apply this 3 percent annual base pay increase to women’s uncontrolled median pay across 40 years, a woman’s lifetime earnings add up to $3,750,000. For the controlled group, when women’s job characteristics are similar to men’s, lifetime earnings increase to $4,570,000. Using this same calculation, we find that the lifetime earnings for all men is $4,650,000.

We see that the average amount of money earned by women throughout their career is $900,000 less than that of men. When we control for women’s pay, it is $80,000 less. In other words, women with the same job title and qualifications as a man, making a median annual salary of $60,700 in 2020, would need to work more than a year longer to earn the same as a man.

The $900,000 gap in lifetime earnings is also just a rough calculation based on current trends. It leaves out the compound interest that might be earned if women were to invest these lost wages, which is even more substantial. In addition, women who face a deeper gender wage gap for their occupation, industry or location relative to the median will face deeper losses. This includes women of color, who are more susceptible to greater losses in lifetime earnings. American Indian and Alaska Native women have the most extreme lifetime wage gap relative to men, with lifetime earnings for these women accruing to $4,130,000 in the uncontrolled group. That is $520,000 less than the lifetime earnings for men. Even when we use the controlled median pay for this group, the difference comes out to $140,000.

Evaluating lifetime earnings in this way offers us a bigger picture of gender and racial economic disparity in the United States. Even a matter of being pennies short of a dollar can amount to tens or hundreds of thousands of dollars over the course of a 40-year career. For women in some racial ethnic groups, catching up to men’s earnings would mean working an additional two years or more.

THE GENDER PAY GAP WIDENS FOR PEOPLE OF COLOR

When data are uncontrolled, women of all races and ethnic groups earn less than white men. The largest uncontrolled pay gap is for American Indian and Alaska Native women, black or African American women, and Hispanic women. These women earn $0.75 for every dollar a white man earns, which improved by $0.01 from 2019. In other words, American Indian, Alaska Native, black and Hispanic women earn 25 percent less than white men when data are uncontrolled for all compensable factors.

Asian women earn $0.95 for every dollar a white man earns when data are not controlled, which improved by $0.02 from 2019 when Asian women made $0.93 for every dollar a man made. Meanwhile, Native Hawaiian and other Pacific Islander women made $0.80 for every dollar a man made, which is $0.01 higher than last year.

For comparison, white women earn $0.81 for every dollar a white man earns when data are uncontrolled, which also improved by $0.01 from last year.

The controlled pay gap differs by race too. When data are controlled, the largest gap is between the earnings of black or African American women and white men. Black women make $0.97 for every dollar a white man with the same qualifications makes. The controlled gender pay gap for Hispanic and white women is more or less the same at $0.98 for every dollar a white man with the same credentials earns, which is also the same as it was in 2019. However, Asian women make $1.02 for every $1 dollar a white man makes. Native Hawaiian and other Pacific Islander women make $0.99.

THE GENDER PAY GAP WIDENS WITH CAREER PROGRESSION

The pay gap widens as women progress in their career, with women at the executive level making $0.95 to every dollar a man makes even when data are controlled and making a shocking $0.69 to every dollar a man makes when data are not controlled. This is an improvement of only $0.01 since last year in the uncontrolled group and no improvement at all in the controlled group.

In looking at the career progression for women holistically, it’s clear that the gender pay gap widens as women ratchet up the corporate ladder, creating an even greater deficit in possible lifetime earnings at higher salaries than the median.

Women also tend to move up the career ladder at a slower pace than men. We call this phenomenon the opportunity gap. For example, a roughly equal percentage of men and women begin their careers as individual contributors, i.e. they do not manage people. In 2020, 75 percent of men and 76 percent of women ages 20 to 29 are in individual contributor roles. However, by age 30 to 44, 36 percent of men became supervisors or managers while only 30 percent of women did. Finally, men are twice as likely to be directors or executives than women by age 45 or older. A total of 6 percent of women make it into an executive level role at any time of their lives while 12 percent of men do.

Occupational segregation also contributes to the gender wage gap. According to the Washington Center for Equitable Growth using data from the Bureau of Labor Statistics, occupations that are more male dominated tend to be paid better regardless of skill or education level. For example, highly paying jobs like finance managers, sales managers, physicians/surgeons, dentists, pilots, and architects have more male representation while lower paying jobs such as childcare workers, hosts, cashiers, laundry workers, and food preparers have more female representation.

Assumptions about what kinds of work women are best suited for is often based on gender norms and can preemptively funnel women into lower-level and lower-paid positions. The most predominant gender norm is that women are meant to have children and will eventually become mothers and homemakers (whether or not they actually do or want to), which can also result in assumptions about their proficiency, productivity levels, or commitment to their careers, which in turn can impact compensation. Women who return to the workforce after having children are also shown to incur a wage penalty. This is the motherhood penalty or the childbearing penalty. Some research suggests that having a child (or having the potential to bear children) is the primary or true cause for the gender wage gap. Indeed, a study commission by Bright Horizons and published in 2019 found that 41 percent of employed Americans perceive working moms to be less devoted to their work and a third judged them for needing a more flexible schedule. Men, conversely, do not experience a penalty in compensation after becoming parents. Some men are paid more after having children.

WOMEN OF COLOR FACE WIDER GAPS IN OPPORTUNITY

We also looked at the opportunity gap by race and found that most women of color are more likely to stagnate in their careers than white women.

With the exception of Native Hawaiian and other Pacific Islander women, women across all races were more represented in the individual contributor group than white men. Sixty-seven percent of black or African American women and 66 percent of Hispanic women are individual contributors compared to 62 percent of white women, suggesting that black or African American women and Hispanic women have a harder time climbing the corporate ladder than white women. For comparison, 58 percent of white men in our sample are individual contributors, which is up two percent from last year.

Interestingly, Asian women are most likely to be individual contributors at 73 percent, which is a one percent increase from last year. Although Asian women are closer to pay equity with white men than white women overall, only 2 percent of Asian women make it to the executive level while 4 percent of white women did. It is also important to keep in mind that the demographic group “Asian” covers many different ethnic groups that are not treated equally in the workplace, which likely is contributing to an increase in income inequality among Asians.

In summary, for the most part, women of color face greater barriers to advancing in the workplace compared to white women. For the race portion of our analysis, we only looked at those who have at least a bachelor’s degree. Due to sample size issues, we’re unable to report data on Native Hawaiian and other Pacific Islanders at the executive level.

WOMEN OF COLOR START OUT FURTHER BEHIND IN PAY

Our research indicates that the playing field isn’t equal at the beginning of careers. Although not everyone starts out at the individual contributor level and some people remain individual contributors (ICs) for the duration of their career, our research found that white, female ICs earn $0.82 for every dollar earned by a male individual contributor. When controlling for compensable factors, a white female individual contributor makes $0.99 to every $1 her white male counterpart makes.

However, the wage gap is wider for black or African American women, American Indian and Alaskan Native women, and Hispanic women at the individual contributor level for data that are not controlled for compensable factors. Meanwhile, Native Hawaiian and other Pacific Islander women made the same as white women and Asian women made more than both white women and white men.

After controlling for compensable factors, we find that women of color make the same or more than white women as individual contributors, although there is a still a one percent gap to white men. This is an improvement from last year.

THE PAY GAP FOR WOMEN OF COLOR ALSO WORSENS WITH CAREER PROGRESSION

For the most part, the gender pay gap widens for the majority of racial and ethnic groups as women move up the corporate ladder, though not to the same degree. The largest controlled pay gap is for black and African American, with black female executives earning $0.62 for every dollar a white male executive earns, which is down $0.01 from last year. Even when we control for compensable factors, black or African American women who are executives get paid $0.93 for every dollar a white man with the same qualifications is paid. The large difference between the uncontrolled and controlled pay gap implies that black and African American women and white men work in different types of organizations even when they both hold senior positions.

Additionally, we know that unconscious bias often seeps into performance reviews and pay increase decisions and that biases disproportionately affect people of color. In 2018, PayScale conducted research to understand workers’ experiences when asking for a raise. We learned that all races are equally likely to ask for a raise from their current employer, but women of color were 19 percent less likely to have received a raise than a white man, and men of color were 25 percent less likely. Our analysis controlled for other factors that affect the likelihood of receiving a raise, like tenure and job level.

HIGHLY EDUCATED WOMEN EARN LESS THAN HIGHLY EDUCATED MEN

Higher education does not lead to pay equity. The gender pay gap sees minimal or no improvement at higher education levels compared to a high school degree, which has a controlled pay gap of $0.98. While other degree levels share this pay gap, some have larger pay gaps. MBAs and Health Professional Doctorates see a pay gap of $0.97. Bachelor’s degrees come closer to pay parity when controlling for compensable factors and see a pay gap of $0.99.

The largest uncontrolled gender pay gap is for those with MBAs. Women with MBAs take home $0.75 for every dollar men with MBAs take home. The gap decreases to $0.97 when we look at the controlled pay gap, suggesting that women and men with MBAs have very different job titles and job levels.

These findings might be indicative of highly educated women taking jobs that are less demanding and therefore less rewarding than their educations may have prepared them for, possibly because of family considerations. However, it may also be indicative of the motherhood penalty or more general bias against highly educated women or women in particular occupations or industries.

Women with a law degree see the smallest uncontrolled gender pay gap, though still a mentionable one. Women with law degrees earn $0.87 for every dollar earned by men with a law degree.

MORE WOMEN FEEL THEY ARE UNDERPAID THAN MEN

In our survey, we asked workers to respond to this statement: “I feel that I am paid fairly within my organization.” We found that the majority of women do not agree that they’re paid fairly by their employer. This is true for women of every race except for Native Hawaiian / Pacific Islander. Comparatively, only 41 percent of men disagreed that they were paid fairly. This is still a significant percentage, but lower than every group of women except for Native Hawaiian / Pacific Islander women.

However, no group was particularly certain about being paid fairly. 25 percent of white men agreed or strongly agreed that they are paid fairly, which was the highest percentage. Among women, only 19-22 percent agreed or strongly agreed that they were paid fairly.

When employees feel underpaid (regardless of whether they actually are or not), it has hidden costs for employers. Feeling underpaid can weigh on the minds of workers, negatively affecting how they view themselves professionally and stirring up feelings of failure, worthlessness and apathy. Some employees will feel that they are to blame for how they are paid while others will resent their employers for underpaying them. When people do not feel they are being paid well, they are less likely to enjoy their work and less likely to feel engaged and committed to the mission of the organization. Ultimately, inaccurate perceptions about pay result in low performance and higher turnover. According to previous research from PayScale, 60 percent of employees who perceived they were underpaid said they intended to leave, compared to only 39 percent of those who perceived they were overpaid.

THE GENDER PAY GAP BY OCCUPATION

Women are paid less relative to men for every occupation we examined in our dataset when data are not controlled. Data from the Bureau of Labor Statistics show that women make up the majority of the workforce in support, service, and wellbeing-related occupations such as community & social services, education, training & library, healthcare practitioners, healthcare support, office and administrative support, and personal care & services.

Although it might stand to reason that the gender wage gap would be smaller in occupations where women dominate, the data showed no such pattern. For example, women dominate in the legal industry, which is 53 percent women and 47 percent men. However, legal had the largest gender wage gap in the study, suggesting that women and men don’t have the same jobs levels or titles within the legal profession statistically.

Education, training & library occupations have the second largest uncontrolled pay gap, despite that women make up the vast majority of educators. Women in these jobs earn $0.72 for every dollar earned by men, even though 74 percent of these workers are women. Although women represent a larger portion of this sector’s workforce, many teach primary education. Most men, however, teach secondary education, where head coaching and administrative duties are more available than in elementary school settings. Such leadership opportunities open doors for superintendent and administrative roles with higher salaries. These disparities are compounded when taken with the harmful stereotypes that women are poor leaders or bad with finances, two pejoratives that thicken the glass ceiling.

Healthcare support occupations, another female dominated sector, has the smallest uncontrolled pay gap. These women earn $0.96 for every dollar earned by male healthcare support workers. Women make up 87 percent of workers in this sector, yet still do not see the same earnings as the other 13 percent of their male colleagues. Women in community and social services jobs have the second smallest gender pay gap of $0.96.

When data are controlled, the gender wage gap for 2020 closes for the legal profession and the community & social service profession. Women in these sectors earn $1.00 for every dollar earned by men when controlling for compensable factors. The controlled pay gap for healthcare support workers is $0.98. Meanwhile, installation, maintenance & repair occupations continue to have the largest controlled gender pay gap in 2020. Even after controlling for various compensable factors, women in these occupations make only $0.94 for every dollar an equivalent man makes. The controlled pay gap is also significant for construction and extraction ($0.96), education, training & library, food preparation & serving related, management, protective services, and sales ($0.97).

When controlling for compensable factors, technology and engineering & science achieve pay equity. While technology and engineering & science do not have a great reputation in terms of equity, they are the only industries to achieve pay parity at the controlled pay gap. However, there is a large difference between the controlled and uncontrolled gender pay gaps in these sectors. Among other things, this is indicative of women and men not having the same job levels or job titles. In addition, women make up only 29 percent of the tech industry and 38 percent of engineering & science workers.

Occupation

Uncontrolled Gender Pay Gap

Controlled Gender Pay Gap

Percent Men (BLS)

Percent Women (BLS)

Architecture & Engineering

$0.94

$0.99

84%

16%

Arts, Design, Entertainment, Sports & Media

$0.93

$0.99

51%

49%

Building & Grounds Cleaning & Maintenance

$0.80

$0.98

58%

42%

Business & Financial Operations

$0.87

$0.98

46%

54%

Community & Social Services

$0.95

$1.00

33%

68%

Computer & Mathematical

$0.92

$0.99

74%

26%

Construction & Extraction

$0.87

$0.96

97%

4%

Education, Training & Library

$0.72

$0.97

26%

74%

Farming, Fishing & Forestry

$0.80

$0.98

75%

25%

Food Preparation & Serving Related

$0.88

$0.97

46%

55%

Healthcare Practitioners & Technical

$0.91

$0.98

25%

75%

Healthcare Support

$0.96

$0.98

13%

87%

Installation, Maintenance & Repair

$0.89

$0.94

96%

4%

Legal

$0.64

$1.00

47%

53%

Life, Physical & Social Science

$0.94

$0.98

51%

49%

Management

$0.78

$0.97

60%

40%

Office & Administrative Support

$0.94

$0.98

29%

71%

Personal Care & Service

$0.92

$0.98

23%

77%

Production

$0.86

$0.96

71%

29%

Protective Service

$0.86

$0.97

78%

22%

Sales & Related

$0.81

$0.97

51%

49%

Transportation & Material Moving

$0.88

$0.98

82%

18%

THE GENDER PAY GAP BY STATE

Alabama continues to have the largest uncontrolled gender pay gap in the country, with women making $0.73 for every $1 a man makes. Alabama also has the fourth largest controlled pay gap, with women making $0.96 to men making $1 with the same qualifications.
Louisiana has the second largest uncontrolled gender pay gap at $0.75 to every $1 a man earns. Louisiana also tops the chart of the controlled pay gap at $0.95 for every $1 a man makes when doing the same job with the same qualifications.

Conversely, Vermont continues to be America’s most equitable state with a controlled gap of $1.01 and an uncontrolled wage gap of $0.89, which is the highest out of all the states.

TOP 20 JOBS WITH THE WIDEST GENDER PAY EQUITY GAPS

To illustrate the impact of the gender pay gap in concrete terms, PayScale looked at the top 20 jobs with the largest gender pay gaps. The following list shows the gender pay gap when all compensable factors are controlled, meaning that women in these positions have the same qualifications as men in the same positions. All of these positions show a wage gap wider than the $0.98 for the controlled group holistically. Some of the positions with the highest gender pay gaps fall into occupations that are traditionally dominated by men or are subject to strong gender norms. However, there are also positions that do not clearly align to skills and responsibilities that are perceived culturally as more masculine or more feminine.

Top 20 Jobs with a Gender Pay Gap

Controlled Gender Pay Gap

Median Pay – Men

Controlled Median Pay – Women

1. Anesthesiologists

$0.83

$355,000

$296,000

2. Electrical and Electronic Equipment Assemblers

$0.84

$34,800

$29,100

3. Farm, Ranch, and Other Agricultural Managers

$0.84

$46,100

$38,800

4. Packaging and Filling Machine Operators and Tenders

$0.85

$36,400

$30,900

5. Fashion Designers

$0.85

$58,900

$50,000

6. Computer Operators

$0.85

$45,200

$38,600

7. Waiters and Waitresses

$0.86

$22,800

$19,600

8. Driver

$0.86

$34,300

$29,600

9. Gaming Supervisors

$0.88

$53,800

$47,600

10. Jewelers and Precious Stone and Metal Workers

$0.89

$45,000

$39,800

11. Chemical Plant and System Operators

$0.89

$46,200

$40,900

12. Chemical Equipment Operators and Tenders

$0.89

$40,800

$36,100

13. Police and Sheriff’s Patrol Officers

$0.89

$50,600

$45,000

14. Music Directors and Composers

$0.89

$46,100

$41,000

15. Dispatchers, Except Police, Fire, and Ambulance

$0.89

$41,900

$37,300

16. Fine Artists, Including Painters, Sculptors, and Illustrators

$0.89

$47,200

$42,000

17. Electrical and Electronic Engineering Technicians

$0.89

$49,300

$43,900

18. Emergency Management Specialists

$0.89

$61,800

$55,200

19. First-Line Supervisors

$0.90

$44,600

$39,900

20. Sales Representatives, Services, All Other

$0.90

$54,800

$49,100

PAY TRANSPARENCY CLOSES THE GENDER WAGE GAP

What can be done to address the gender wage gap? A recent research report from PayScale found that when all compensable factors are controlled, pay transparency closes the gender wage gap completely. Pay transparency is a spectrum for how organizations share information about pay practices and decision making with employees. For women who agreed that their organization’s pay practices are transparent, the gender wage gap was nonexistent, with women making between $1.00 and $1.01 for every $1.00 that a man makes. This was true across age groups and job levels. Pay transparency was also shown to narrow the gender wage gap across occupation and industry.

Why? Well, part of the reason for the gender wage gap is the unwillingness of many organizations to modernize their compensation practices. Many organizations today rely on traditional compensation models where pay is determined in the shadows and reliant on negotiation and manager discretion. The problem with a closed approach is that it statistically favors men. Many organizations are subject to unconscious bias and gender norms that punish women for asking for more.

Pay transparency is thought to counteract pay inequity because it forces organizations to mature their compensation practices and develop a thought-out, data-driven approach to compensation planning that places value on the job more than the person and is fair to all employees. Organizations with mature compensation practices have a pay philosophy, a compensation structure with pay grades and job-based pay ranges, and provide manager training on pay communications.

Pay transparency is also gaining in popularity for reasons other than closing the gender wage gap. With digital transformation, transparency is becoming increasingly common at all levels of business. As part of a broader compensation plan, pay transparency has also been shown to have a positive effect on job satisfaction, employee engagement, and productivity.

HOW TO ADVOCATE FOR PAY EQUITY ANALYSIS

Pay equity is a sticky subject for a lot of organizations. Most businesses don’t want to pay women less than men but conducting a gender-based pay equity audit can be daunting. This is true both logistically and legally. The unfortunate truth is that most organizations don’t have enough insight into their compensation data to draw any conclusions as to whether they might be paying some employees unfairly.

Worse, if organizations manage to gain this insight and discover that they have been systemically shortchanging certain groups on compensation, especially demographic groups that are legally protected by EEOC law, they become legally responsible to fix the problems — and fast. Many organizations don’t have processes for this.

However, employers don’t have the option to ignore pay equity indefinitely, especially if they suspect there might be a problem. The law requires organizations to pay men and women equally where they do equal work. In addition, there are many states pushing for legislation to force pay transparency in order to bring about pay equity. Organizations that choose to ignore the trends of the times and delay conducting a pay equity analysis are putting themselves at risk of exposure and lawsuits down the road.

According to our recent Compensation Best Practices Report, 38 percent of organizations are planning to a pay equity audit in 2020. For organizations interested in conducting pay equity analysis but unsure when to begin or how to get both management and the legal team on board, we have put together a guide that walks you through the process of getting started.